The International Ethics Standards Board for Accountants has re-exposed a proposed standard to guide auditors, other professional accountants in public practice, and professional accountants in business to help them decide how best to act in the public interest when they come across an act or suspected act of non-compliance with laws and regulations.
The enhanced standard, “Responding to Non-Compliance with Laws and Regulations,” provides a new framework what practitioners should do when they encounter suspected wrongdoing at the companies where they work or among their clients.
“Fundamentally, all professional accountants have an ethical responsibility to respond in these situations and not turn a blind eye to them,” said IESBA chairman Dr. Stavros Thomadakis in a statement. “Importantly, their response can play a role in ensuring that serious instances of non-compliance with laws and regulations are appropriately addressed, or in deterring them. The board intends the proposed framework to guide professional accountants’ response in these situations, ensuring their actions serve the public interest while recognizing the essential role of management and those charged with governance in addressing the issue.”
IESBA operates under the auspices of the International Federation of Accountants, whose member bodies include the American Institute of CPAs.
Among other matters, the proposed standard aims to better equip auditors and other professional accountants to address such issues by providing a pathway to disclosure to an appropriate authority in appropriate circumstances without the duty of confidentiality under the Code of Ethics for Professional Accountants acting as a barrier. It also places renewed emphasis on the importance of senior-level business accountants in promoting a culture of compliance with laws and regulations within their organizations.
“The board believes that the proposed framework represents a holistic, proportionate, and balanced model for addressing what can often be complex situations,” said IESBA technical director Ken Siong. “The board also believes that the proposed standard’s enhanced guidance will support and complement legal and regulatory frameworks in jurisdictions that already mandate reporting by professional accountants of identified or suspected non-compliance with laws and regulations to appropriate authorities.”
The development of the proposed standard comes after the IESBA received responses from stakeholders to the first exposure draft it issued in August 2012 and extensive consultation with stakeholders, including global roundtables in Hong Kong, Brussels, and Washington, D.C., in 2014, along with discussions with the IESBA Consultative Advisory Group.
The Ethics Board is asking for further public comments on the exposure draft, particularly from regulators and audit oversight bodies, preparers, those charged with governance, investors, accounting firms, and all other stakeholders who have a role or interest in addressing the relevant issues. National and regional professional accountancy organizations also are invited to share the document and encourage participation from their members and employees. To access the ED and submit a comment, visit the Ethics Board’s Web site at www.ethicsboard.org. Comments are requested by Sept. 4, 2015. For an overview of the proposed standard, see the At-a-Glance document.
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